Vedanta Resources is expected to announce as early as tomorrow its purchase of a 51% stake in Cairn Energy's Indian unit for about £5bn.

During meetings in Mumbai and London over the weekend, the two companies were finalising details to complete Vedanta's expansion into the oil and gas market. The London-listed but India-focused miner, controlled by billionaire Anil Agarwal, had so far concentrated on metals such as zinc, copper, aluminium and iron ore.

The funds will allow Edinburgh-based Cairn Energy, which owns 62% of Cairn India, to finance its expansion in the Arctic region, where it is exploring for oil off Greenland.

Cairn India is also 14.9%-owned by Petronas, Malaysia's state-controlled oil company, while some of the remaining shares are listed on the Mumbai stock exchange, valuing the business at about $14.4bn (£9.2bn).

The sale is expected to bring a windfall to Cairn Energy chief executive Bill Gammell, who owns about 0.5% of the company, as well as to leading backers, such as BlackRock, the US fund manager.

Cairn Energy is expected to return some of the sale proceeds to shareholders through a special dividend, although no final decision has been taken yet.

Vedanta shares plunged last week on concerns that the company would have to issue new shares to finance the acquisition, as the company had net debt of about $900m at the end of March.

The shares fell 5.8%, or 128p, to £20.53 on Friday, the biggest fall in the FTSE 100. The company is worth about £5.7bn. Cairn shares rose 3.4%, or 15.5p, to 448p.

Vedanta is planning to secure oil and gas to fuel the power plants it controls in India, which are now fired by coal, analysts said. Cairn India controls the Mangala field in Rajasthan, the discovery of which in the early part of the decade transformed the fortunes of Cairn. Vedanta said in 2008 that it would spend $20bn in India on mines and power plants over four years.

The company has been heavily criticised for alleged "crimes against the environment". At a recent annual shareholders meeting in London, protesters attacked its plans to dig a bauxite mine in eastern India, which is said to be held sacred by indigenous people. Amnesty International published a report last year claiming that a Vedanta refinery in the same area had polluted rivers, damaged crops and disrupted the lives of the Dongria Kondh tribe in the Niyamgiri Hills.

Agarwal and Vedanta's chief executive, MS Mehta, rejected charges of having displaced local people after the construction of the refinery, arguing their operations would "spread wealth" to one of the poorest regions in India. At the group's annual meeting last month, he told critics: "Rates of malnutrition among young children are running at 50% and many people are forced to go to cities where they struggle to find work. Our mining operations are a source of employment and prosperity."